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2-4 Funds are separate fiscal and accounting entities, each with its own self-balancing set of accounts.
2-4Funds are separate fiscal and accounting entities, eachwith its own self-balancing set of accounts.The newly established Society for EthicalTeachings maintains two funds—a general fundfor operations and a building fund to accumulateresources for a new building. In its first year, itengaged in the following transactions.a. It received cash contributions of $200,000, ofwhich $40,000 was restricted for the acquisitionof the new building.b. It incurred operating costs of $130,000, ofwhich it paid $120,000 in cash.c. It earned $3,000 of interest (the entire amountreceived in cash) on resources restricted for theacquisition of the new building.d. It transferred $17,000 from the operating fundto the new building fund.e. It paid $12,000 in fees (accounted for asexpenses) to an architect to draw up plans forthe new building.1. Prepare journal entries to record the transactions.Be certain to indicate the fund in whichthey would be made.2. Prepare a statement of revenues, expenditures,and other changes in fund balances and abalance sheet. Use a two-column format,one column for each of the funds.
